• Runs to BCL for refunding
• Vermas form a recycling company
• BCL GM’s wife director of the company
• Did the Vermas violate agreement with BCL?
• BCL board to investigate
Cash-strapped Pula Steel Casting and Manufacturers, a subsidiary of BCL Limited, is said to be now heading for a financial quagmire. Highly placed sources at the company have revealed that the steel recycling company is running short of funds after it gobbled over P89 million which was budgeted to complete the whole project.
Recently Pula Steel management approached BCL seeking an additional funding of P53 million but their proposal was turned down until they give a full audited financial report on how they have spent the P89 million. Pula Steel, which is part of BCL’s ambitious strategy of POLARIS II, is in partnership with the Verma family, who are the technical partners of the project as they have experience in steel casting manufacturing and Wealth Generations - a citizen owned company. Wealth Generations shareholders are Botswana Democratic Party (BDP) Secretary General Mpho Balopi and former BEDIA executive Brian Mosenene.
According to sources, BCL management is not happy with the way Pula Steel Project has been run and will not fund it further until they finish their investigations. Contacted for comment, Pula Steel Corporate Affairs Manager Mosenene said that they cannot discuss the issue with the press. “These are confidential issues which we cannot discuss with the third party and as such I cannot comment on the issue,” he said.
BCL Board chairperson Dr Akolang Tombale said that currently they are awaiting a report from the Pula Steel board on how the project is going. “We are going to review whether the project is still in line with our agreement and its intention and purpose,” he said.
Asked if they are going to institute an investigation into allegations of maladministration at the project, Tombale said that he cannot say much until they receive the report.
Vermas form another recycling company
After signing the key man’s agreement with BCL mine, which stipulates that as the technical partners in the project they should not be engaged in any business that will compromise the casting and manufacturing plant, the Vermas have formed another company. The Vermas, who used to own a textile firm, closed it down to concentrate on the Pula Steel project as per the agreement.
On the 8th of May ACME Services (PTY) LTD applied for reservation of company name and the first three names were Pula Clean Energy and Fuels, Recycled Energy and Fuels and Enviro Fuels and Energy. The Registrar of companies and Intellectual Property rejected the first name Pula Clean Energy and Fuels and approved the second one Recycled Energy and Fuels. The company is 100% wholly-owned by Deepak Verma – one of the directors at Pula Steel Casting and Manufacturers. One of the directors of Recycled Energy and Fuels is Sarah Mahupela, the wife to the BCL General Manager Dan Mahupela and was appointed on the 7th of July 2014.
Sources within BCL management have revealed that this is totally in violation of the key man’s agreement that the Vermas have entered into with BCL enterprises. The Sefhope-based Recycled Energy and Fuels, who use the same address as Pula Steel, recently advertised some jobs in the local press. The company will be recycling waste resources and prides itself as one of the first to come up with green initiative.
Asked if they are not in violation of the key man’s agreement, Recycled Energy Director Verma said that he cannot comment about his new company or its association with Pula Steel. Mosenene rebutted allegations that the Vermas have violated the agreement with BCL, noting that the agreement stipulates that they should not be engaged in a business similar to steel recycling.
BCL board Chairman Dr Tombale confirmed that they have a key man’s agreement with their technical partners at their steel project but said he cannot say out the details. Asked if they are aware that the technical partners at Pula Steel Casting and Manufacturers have now opened another recycling project near Selibe Phikwe, the former Permanent Secretary in the Ministry of Minerals, Energy and Water Resources said that he was not aware of that. “Maybe the management at BCL might be aware of that and will brief us when we meet,” he said.
BCL Mine owns 50.5 per cent stake, CEDA 26 per cent, Vermas own 17 percent while a citizen-owned company Wealth Generation Holdings (Pty) Ltd holds 6.5 percent. Upon completion the plant is expected to directly employ over 1000 people when it is in full operation. The plant was supposed to cost P89 million but currently is in need of cash injection as its coffers are said to be running dry.
They have been allegations of misappropriation of funds at the project and last year during the month of July, the company is said to have used over P38 million. The plant, which is being constructed in two phases is expected to start operations in August this year and produce its first billet.
In an interview recently, Mosenene revealed that they have already secured long off-take with international market for their product with customers in China, Dubai and India and will export 50% of their billet. The plant is expected to help ease import of steel which in 2013 stood at P2.6 billion most of which was from South Africa at 50 percent followed by China at 40 percent.